[RAM] RAM Ratings affirms AAA rating of KIP REIT Capital's RM240 mil 2024-Issue 4 Class A MTN

RAM Ratings has affirmed the AAA/Stable rating of the RM240 mil 2024-Issue 4 Class A Medium-Term Notes (MTN) under KIP REIT Capital Sdn Bhd’s RM2.0 bil Perpetual MTN Programme. The Class A MTN are backed by four properties – KIPMall Tampoi (KMT), KIPMall Masai (KMM) and KIPMall Bangi (KMB) (collectively, KIPMalls) and AEON Mall Kinta City (AMKC). 

KIP REIT Capital is a funding conduit of KIP Real Estate Investment Trust (the REIT) to facilitate the REIT’s fundraising exercise under the RM2.0 bil MTN Programme.

The rating action reflects the resilient operating and cashflow performance of the four properties, underpinned by their strong attributes and the REIT manager’s proactive asset enhancement initiatives (AEIs). The properties are leading community malls located within mature catchments, anchored by essential services and fresh-market trades that are more resilient to inflationary pressures and less replicable by competitors. Each property contributed no more than one-third of portfolio net property income (NPI) in 9M FY Jun 2025 while the top 10 tenants of the KIPMalls accounted for approximately 20% of combined gross rental income. Thanks to AMKC’s long-term triple-net lease arrangement with AEON CO. (M) BHD., the portfolio enjoys better cashflow stability and a slightly longer weighted average lease expiry of 2.5 years relative to other retail asset portfolios.

For FY Jun 2025, total NPI of the four properties will likely meet or surpass RAM’s sustainable cashflow (SCF) assumption of RM53.5 mil. The properties’ NPI was 4.5% higher y-o-y at RM41.6 mil in 9M fiscal 2025, with improved occupancy of 96.3% (+2.0% y-o-y) and positive rental reversions of 4%-10% across the properties. With SCF assumption maintained, Class A MTN’s loan-to-value and stressed debt service coverage ratios of 39.3% and 2.62 times, respectively, stay commensurate with levels supportive of its current rating.

Looking ahead, we expect the REIT’s planned AEIs at KMT and the proposed expansion of AMKC – involving the conversion of its carpark into a new retail block, targeted for completion in 2027 – to enhance the portfolio’s appeal and earnings potential. Our SCF assumption will be reassessed when we have better visibility on the earnings upside from proposed AEIs and expansion.


Analytical contacts
Tan Yan Choong
(603) 2708 8256
yanchoong@ram.com.my

Tan Han Nee 
(603) 2708 8322
hannee@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my